advice hub

Use a Skip A Payment Offer to Your Advantage

Payment Due circled on a calendar in red

You’ve probably seen them sitting in your mailbox or inbox: offers from your financial institution inviting you to skip a payment and save some money. But is it a good idea to skip your payment for a month? The answer is, it depends on how and when you plan to use the savings.

Pre-holiday Shopping

The busiest shopping time of the year always seems to sneak up on us even though stores start offering sales and decorating for the holidays months in advance. Budgeting and saving in advance for the gifts you plan to purchase is always best, but often times we’re down to the wire buying last minute items for those on your list. According to the American Research Group, shoppers planned to spend an average of $861 on gifts in 2014, up 8 percent from 2013 and more than double the amount spent in 2009 during the start of the Great Recession.

With that much money leaving our wallets in a short amount of time, a Skip A Payment offer from your financial institution can be a welcome break from day-to-day bills during the months of November or December. These offers typically take the form of skipping an auto loan payment in exchange for a small fee. USA Today reports that Americans’ average new car payment hit a record $482 in the fourth quarter of 2014. By skipping that payment and using it toward your holiday purchases, you’ve covered more than half the expected spend. For many shoppers, that is a huge stress relief.

Post-holiday Bills

The flip-side to the pre-holiday shopping benefit, is a much needed break from loan payments a Skip A Payment offer can provide after the shopping is over and credit card bills start rolling in around January and February. Some financial institutions will allow customers and members the choice to skip a payment toward the beginning of the year so they can focus on paying down holiday debt. If you are given both options by your bank or credit union, how do you decide which is best? It all comes down to timing and planning. In the pre-holiday shopping situation, if you haven’t saved for your gift expenses or think you might incur more than you planned, the November or December payment offer might make more sense. However, if you have saved for most of your holiday spending in advance, the January or February payment reprieve might help you pay off remaining credit card balances faster.


Your bags are packed and you’re ready to go out on a family vacation or dream adventure – the last thing you want to worry about is whether or not you have enough money to cover unexpected costs away from home. A Skip A Payment offer allows you to have extra money in your bank account just in case you need it while you’re on vacation.

Unexpected Expenses

It’s not something pleasant to think about, but sometimes unexpected expenses come up because of a job loss, medical condition, and major auto or home repairs (e.g. new transmission or water heater). Opting to defer a loan payment for a month can not only help you adjust and plan for the new impact to your budget, but it can also help reduce stress due to incoming bills. While considered a valuable tool during these times, it’s important to note that a Skip A Payment offer is not meant to be a long-term solution to budget problems. In these situations, it’s best to talk with a private budget counselor or one associated with your financial institution.  

Understand How It Works First – Not Payment Elimination

Before deciding whether or not to participate in a Skip A Payment offer, understand that these types of promotions do not shorten the term of your loan, but rather extends it and could result in paying more interest over the life of the loan. However when used correctly, this type of offer can be an effective resource for your monthly budget.